As a first time homebuyer, you might wonder the reasoning behind many of the tasks you are expected to complete in order to obtain a mortgage or loan and take possession of the home. Being required to have your new home appraised is often seen as the most questionable necessity. However, from the perspective of a financial institution, a new home appraisal provides vital information on the home’s true worth.

In the eyes of a lending agency, the home appraisal is a necessity. It reveals how much your potential home is worth in its current condition and often serves as a collateral value for the loan itself. If a problem is discovered during the inspection and appraisal, the bank will often change the conditions of a loan guarantee or drop out of the deal altogether. This can happen even if you were prequalified for a specific amount. On the other hand, a home that is valued for more than the mortgage loan is approved for makes the deal that much sweeter for lending companies that look to make a large profit should foreclosure become necessary.

To maximize the benefits of a home appraisal, you can have your dream home inspected and appraised before you decide how much to request on a mortgage loan. This will ensure that what you get for the loan matches the value of the home and gives you the most potential for a successful home buying experience. Unless you have previously agreed otherwise, the home appraisal fee, which usually costs between $200-$400, is your responsibility.

Have further questions, or interested in getting started in the pre-approval process? Visit our Financing Page. Our preferred lender can help you get started in making your dream home come true. Click Here to learn more.

If you plan to buy a home in your lifetime and don’t have a large trust fund or lottery winnings, one of your first stops in a home search will be a bank or lending company. A mortgage is a loan that you receive from a financial representative that is placed against the value of your home and promises the bank that you will pay for your new home over a period of time, which can vary from fifteen to thirty years.

There are two general types of mortgages: variable interest rate mortgages and fixed rate mortgages. The interest rate is what you will pay on top of the amount you borrow as a “privilege” for borrowing the bank’s money. With a fixed mortgage you will pay the same amount every month. A variable rate mortgage often seems more appealing to new home owners because you pay a lower interest rate at the beginning of your payment schedule. However, variable interest rate mortgages are susceptible to market changes, often increasing as time goes on.

A mortgage loan is essentially a loan against your new home, so if you fail to repay it you can lose not only a positive credit reputation but your new home as well. This is why a mortgage is also known as a “lien” or a “claim” on your property. Because of the risk of losing your home, you should be careful not to over-extend yourself when applying for a mortgage loan. Choose a house that is within your current budget and doesn’t require a lot of updating.

Have further questions, or interested in getting started in the pre-approval process? Visit our Financing Page. Our preferred lender can help you get started in making your dream home come true. Click Here to learn more.

When searching for a home, you will eventually find yourself sitting face to face with a mortgage lender who will be evaluating your financial history. At that time, you might find yourself

struggling to gather enough information to present a positive lending history. You can avoid the discomfort of this process by going through a process to get pre-approved or pre-qualified.

A pre-qualification process relies on information you provide to a mortgage broker or lender. It can often be completed online but can also be done through an in-person interview with a lending specialist. Unlike the process of being pre-approved, which involves the requisition of paperwork from a variety of sources, a pre-qualification process relies solely on the information you choose to provide. In essence, it only gives you a potential scenario for how much you might be qualified to borrow, rather than promising that amount. The information is provided to you on the basis of your credit score, amount of debt already owed and your income.

If you want to receive a true representation of the amount you might be able to borrow, it would benefit you to spend the time and effort to attempt to be pre-approved for a loan, which involves more paperwork and a more in-depth study of your financial situation than simply pre-qualifying to buy a home.

The other reason to get pre-approved or pre-qualified is home sellers will take your offer more seriously. Knowing that a homebuyer is already approved for a mortgage or has the strong potential of qualifying for a mortgage tells the seller you are serious.

Have further questions, or interested in getting started in the pre-approval process? Visit our Financing Page. Our preferred lender can help you get started in making your dream home come true. Click Here to learn more.